Mortgage Free is Not Home Free

By Ray and Dana Brandon

Ray’s Take Every homeowner looks forward to the day the mortgage is paid and the family home is owned, free and clear. Mortgage-burning parties are a right of passage. However, that’s not the end of home-related expenses. It is important to do the math before you absorb the amount of that monthly note back into your lifestyle.

There are still property taxes to pay, as well as homeowner’s insurance. These two expenses alone can easily reach $1,500 to $2,000 a month. There’s also the cost of regular maintenance, not to mention the expense of big-ticket replacements such as heating/cooling systems, a new roof or remodeling. Add the expenses of updating data connections, pest control, energy-saving upgrades and alarm systems; it all adds up.

No wonder so many people wind up in financial trouble when they make the move from renting to owning. It’s one thing to compare rental rates to mortgage costs, but it’s also important to remember all these other expenses as well – costs that are often overlooked. Far too often people think that renting is “money down the toilet” without considering the true cost of homeownership.

You should also reevaluate these expenses after the mortgage is paid off. You may be surprised at just how much homeownership still costs. A couple we know realized they could rent a three-bedroom townhome with community pool, tennis court and gym for what they’re still spending on their mortgage-free home. It’s a tempting proposition with a lot more flexibility.

There are alternatives to giving up on the dream of homeownership. Downsizing or buying a home where property taxes are low are two options. Neither will eliminate costs, but may make them more palatable.

Whether you’re considering homeownership for the first time or your mortgage is paid for, look at the whole cost of homeownership to determine if your lifestyle will be enhanced proportionately to the expenses you’ll face.

Dana’s Take Aside from the dollars you spend on a home, there’s still another way homeownership costs you dearly: your time.

Whether you are a do-it-yourselfer or prefer to hire professionals for tasks from mowing the lawn to painting the living room, your time is involved. It’s not uncommon for homeowners to spend the majority of their weekends dealing with home maintenance issues. Compare that to renting, where exterior maintenance happens automatically and your landlord is responsible for taking care of maintenance issues inside.

Another way to lower time spent on maintenance is moving to a condominium or zero-lot community. We moved to a gated community a few years ago and can’t count how much time Ray has saved on yard work. He says he hears angels sing every time the landscaping crews mow. How much is that freed-up time worth to him and our family? Priceless.

Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at raybrandon@brandonplanning.com.